Keynote Speech by IMF Managing Director Kristalina Georgieva at Japan’s Ministry of Finance’s “Future of the Global Economy amid a Fluid International Economic and Monetary Order” Symposium in Tokyo, Japan

Good afternoon. I want to applaud Japan’s Ministry of Finance for convening this important and timely discussion.

The topic of the symposium, “The Future of the Global Economy in a Fluid International Economic and Monetary Order,” poses exactly the right question.

And “fluid” is exactly the right word. The global economy faces deep currents of change—in technology and demographics, in geopolitics and trade, in climate—while also dealing with shock after shock.

During my 6½ years at the helm of the IMF, we have seen Covid, four years of war in Ukraine, a cost-of-living crisis, and much more. The fact that world growth has held up quite well—we currently forecast it at 3.3 percent in 2026 and 3.2 percent in 2027—speaks of remarkable resilience.

But the shocks keep coming. We are seeing resilience tested yet again by the new conflict in the Middle East. Important oil and gas facilities have suffered damage and stoppages; shipping traffic through the Strait of Hormuz has fallen by 90 percent.

For much of Asia and the world, energy security has shot up the list of concerns. If the new conflict proves prolonged, it has clear and obvious potential to affect market sentiment, growth, and inflation, placing new demands on policymakers.

Two facts. One, about a fifth of global oil supply and LNG trade normally transits through the Strait of Hormuz. This includes almost half of Asia’s oil imports and about one-quarter of its LNG imports. For Japan, the figures are almost 60 percent of oil imports and 11 percent of LNG imports. And two, world oil prices are up nearly 50 percent since December, while Asia and Europe face steep increases in gas prices.

As a rule of thumb, we see every 10 percent increase in oil prices—if persistent through most of this year—resulting in a 40 basis point increase in global headline inflation and a 0.1–0.2 percent fall in global output.

We........

© Eurasia Review